1. Field of the Invention
The present invention generally relates to foreign currency exchange (FX) trading in support of the trading of securities and other commodities internationally. More particularly, the present invention relates to a globalized trading network that permits trading of various currencies, either as the asset class or as part of a security transaction.
2. Background of the Invention
The trading of various financial instruments such as equities (i.e. stocks) has been known for many years, and various stock exchanges exist all around the world. For example, one well-known stock exchange in the United States is the New York stock exchange (NYSE), with other being the NASDAQ and the AMEX stock exchanges. The United Kingdom has the London Stock Exchange. However, for a long period the trading of stocks was reserved for either large organizations or for the wealthy, and it was difficult for the ordinary investor to knowledgeably buy and sell individual stocks at reasonable prices. In recent years, the explosive growth of the internet has lowered the time and transaction costs previously necessary to research and trade individual stocks, leading to the popularity of trading of stocks on-line. This lowering of costs is especially true for the investor who is buying or selling stocks that trade on an exchange in his own country.
The problems of cross-border trading of equities has not been so easily solved, however. The conventional method to execute cross-border trading includes the use of telephone calls and facsimiles. For example, a Swedish investor might call his broker and request a trade of an equity handled in a United States exchange. The Swedish broker would call his U.S. counterpart, and contact by phone call or facsimile would then be made with a U.S. market maker, a U.S. bank, a Swedish bank, and a Swedish custodian. Obviously, this is a time consuming and expensive method to make cross-border trades. Therefore, even though there has been a substantial increase in the amount of cross-border trading of equities because of the heightened interest of individual investors, to a great extent individual investors remain limited to buying and selling stocks that trade in the their own markets. For example, despite the attraction of the United States stock market, an Australian investor may be able to buy and sell only stocks that trade on the Australian stock exchange (unless he wishes to pay very high commissions). Similarly, the individual investor in the United States may see opportunities in which he would like to invest in overseas, such as a particular equity in Europe, but the cost of buying and selling these stocks is unrealistically high.
It would be advantageous if there existed a system to simplify cross-border trading of stocks, options, mutual funds, and fixed income instruments. It would also be advantageous if such a system could trade different currencies directly, without any need to trade an equity or other financial instrument in concert.